I recently interacted with someone on Google+ related to a post showing “average CEO pay in the US” compared to other nations. It stated flatly that the pay was 475 times the pay of the average worker. So I questioned the source.

There are three kinds of lies: lies, damned lies, and statistics. – Mark Twain (among others)

The most recent of these articles were based on the 2011 release by the AFL-CIO. A number of websites simply repeated and linked to the AFL-CIO page without challenging a single assumption. For example, two important points need to be considered:

The compensation considered was only that of the CEO’s of 299 of the largest US corporations;

The median worker compensation was not adjusted in any way by education, experience or any other factor;

I’m curious why no other questions were asked. For example:

What is the average pay of all CEO’s? If we’re going to compare the average pay of all workers, we should compare it to the average pay of all CEO’s.

Is “CEO” the only chief executive title in use in the US? For example, I’m self-employed and my title isn’t CEO. Would my seemingly meager compensation be included in the all-CEO numbers? (No.)

What is the average pay of the employees of those 299 companies? If we’re only going to compare the top 299 CEO’s maybe their employees are in the top 299 also. I’m curious how their pay compares to the median income for all US workers regardless of region or education.

The AFL-CIO and most of the people linking to their article didn’t bother to take 5 minutes to perform any relevant comparisons. I went to Salary.com and searched for the average total compensation for CEO’s. It came back at over $1.2 million in my zip code which still seemed surprising. So then I searched for “President” and found this chart which shows the average annual base salary for the top administrative executive to be just over $300,000. Well, $300,000 is less than 10 times the median employee salary! Had the number been 10×1 instead of 475×1, I’m sure the AFL-CIO, Payscale.com, ABC News, USA Today and others would have had to write about something else.

Two key observations

First of all, there are more self-employed people than ever before. And that number will continue to increase. All of those people will continue to be excluded from any salary study used by the AFL-CIO because in a society dominated by the self-employed, unions are useless. In their own self-interest, unions rapidly becoming extinct just like traditional media, record companies, and snail-mail.

Second and more importantly, this demonstrates that many in our society continue to think that someone other than themselves is treating them unfairly or holding them down. CEO’s, like politicians, are easy targets.

If we fall in the trap of thinking someone or something has disadvantaged us we become victims. As victims, we are entitled to restitution for the unfair treatment. We start to think that others should regulate the behavior of “those people” who are holding us down.

There is no defense for those CEO’s who make hundreds of times what their average employees make. Greed is pervasive. (More on this in a future post.)

But self-employment will continue to increase. Many have reported that our economic recovery will be jobless, meaning that self-employment will produce the income of more and more people in our culture for quite some time. Self-employment teaches you quickly that the victim-mindset is baggage. It slows you down and makes you less effective. Self-employed people understand better than anyone the power of determination, persistence, belief and hope.

No one is holding you back. You can find exceptions to every class bias and every limiting circumstance. The only factor keeping you from overcoming limitations is you. Spend all your time blaming someone else for your situation and it will NEVER improve. In fact, it will deteriorate further. A victim mindset is prison with no hope of parole. The first step to freedom is to choose your future. What do you have to lose?

* Note: The AFL-CIO article only shows the compensation to be 342 times the average worker pay. They compare that to a study done in 1980 but I couldn’t find any note on how many CEO’s were included in the 1980 study.

Thanks for the comment. I wonder if the reason for the lack of civil discourse is because we would rather be right in our own minds than find the truth. Could this all be linked to our desire to define our own version of the truth for ourselves? Mike…

Thanks for taking the time to put the spotlight on this one and peeling back the curtain of misleading information. Yes there is greed in the form of compensation completely out of line with contribution but that is not just at the CEO levels.

Where the self employed fit into the economic picture is a very also a very good question. Had this thought that we are kind of like the aboriginals in Austratlia – do we count if no one knows how to count us or we don’t fit into the categories already defined? If we are choosing to play by our own rules of 100 percent responsibility for ourselves perhaps we don’t even need to care.

Thanks for the comment. It concerns me because I know a number of small business people, very few of which make several multiples of their employees, yet they get painted with the same brush. My previous employer before becoming self-employed lost a lot of money when the company was sold and we only employed a little over 100 people (less than that at the end). Most “CEO’s” don’t make hundreds of times what their people make. They just don’t.

But, possibly because of our own desire to support our own version of the truth, we simply look for statistics that seem to line up with what we believe and then we spread that all over the Internet. It’s one consequence of relative truth… we all become divided by our opinions rather than seeking to find a unifying truth.

And generally the truth is less complex. There are some crooks. There are some boards of directors who pay these people because they want the exorbitant income as well. And many of us are fine with it when our 401k’s and our IRA’s are increasing in value. We’re only upset with it when it goes down. Then we want to blame someone.